Fetal and neonatal immune system is known to be immature and antigen stimulation can cause tolerance rather than effector responses. Monocytes in peripheral blood differentiate to macrophages and dendritic cells (DC) which drive adaptive immunity, and they also likely provide cytokine support for T-independent B cell responses. We have recently identified two populations of monocytes (CD14+) in cord blood, CD36hi and CD36low and shown that the CD36hi monocytes drive development of regulatory T (Treg) cells. Study suing specific inhibitors showed that induction of Tregs require TGF-? signaling while IL-10, retinoic acid, or aryl hydrocarbon receptor signaling is not required. CD36h monocytes express the latent form of TGF-? complex on the cell surface. We hypothesize that the immunosuppressive state of infants is due in part to the predominance of these immunosuppressive CD36hi monocytes which promote expansion of Treg cells. We also hypothesize that membrane-bound TGF-? provides a signaling process required for generation of Tregs. In Aim 1, we will examine the mechanism by which TGF-? is attached to the cell membrane of CD36hi monocytes. In Aim 2, we will monitor localization of TGF-? receptor complex and its down stream target molecules during induction of Foxp3+ Tregs by CD36hi monocytes. Results from these studies are expected to provide a basis for understanding fetal/neonatal tolerance and will help developing safer and long lasting immunesuppression. The outcomes of this study will also help overcoming the immunocompromised state of infants by a combination of more effective vaccine adjuvants that will abrogate the immunosuppressive state of infants as well as enhance their immunity.